Social Security checks include big increase

Ward Stevens, 78, is happy about the 5.8 percent cost-of-living adjustment he will receive in Social Security benefits in January.

Montanette Murphy

Ward Stevens, 78, is happy about the 5.8 percent cost-of-living adjustment he will receive in Social Security benefits in January.

“It’s the largest (cost-of-living adjustment) increase that I can remember,” he said. “But on the other hand, if Medicare goes up as well, it’ll wipe out some of the increase.”

In January, more than 55 million older Americans will see the boost of nearly 6 percent in the amount of money they receive in Social Security benefits – the largest percentage increase since 1982, according to the Social Security Administration.

The average Social Security check for a retired worker is $1,090 per month, said Mark Lassiter, spokesman for the Social Security Administration.

In January, those recipients will see about a $63 increase in their Social Security income – bumping their monthly benefits to $1,153.

Each year since 1975, Social Security beneficiaries have received a cost-of-living adjustment. In 1982, the cost-of-living increase was 7.4 percent.

Less than a third of Social Security recipients pay taxes on their benefits, Lassiter said.

The annual cost-of-living adjustments help to prevent inflation from eating away at retirees’ Social Security income, Lassiter said.

“This is really one of the valuable things about Social Security,” Lassiter said.

The rates of the annual increases are determined by how much the consumer price index increases.

The consumer price index is a monthly measure of the average change in the prices of goods and services purchased by households, according to the U.S. Department of Labor’s Web site.

The Bureau of Labor Statistics of the federal Department of Labor monitors the consumer price index.

The annual cost-of-living adjustments are necessary, said Arthur Friedberg, a professor of economics at Mohawk Valley Community College.

Friedberg said the inflation rate and the way in which seniors spend their money should be taken into account.

Most seniors are paying for rising health care costs, he said. And those costs are outpacing the inflation rate.

“With the cost-of-living adjustment, it compensates for the rise in prices,” he said. “However, understand that the inflation rate is not the same for all people.

“Retired people or elderly people may be spending their money in a different way than the government assumes for most of us. So for many seniors, the cost-of-living adjustment is very modest.”